I liked the following comment (from @JFinDallas) on that post, which sums up the point I was making, which was that everyone involved knows the rules of the game – that’s why Goldman isn’t cold calling your grandmother on the phone and pitching her interest rate swaps…

“The problem with Greg Smith is that he probably chose the wrong career, this is how the game is played and pretty much everybody involved understand the rules, the muppets/clients are not stupid.

15 years ago (when GS was still a virtuous firm and had a “culture” according to Greg Smith) I was a Goldman Sachs “muppet” as a fund manager, I talked to them almost every day for 7 years, they made us a great deal of money and had top notch customer service, also on a weekly basis they would try to stiff us with the shittiest crappy deals, but we knew that was part of the game, and even if we obliged on some of the crap we still made boatloads of money with them. They were our number 1 relationship and we made sure that relationship was profitable for everyone involved.

If you don’t understand that structured products, derivatives, etc… are designed to generate fees and with a sizable margin for the issuer on top what they might get paid to assume that risk you probably shouldn’t buy any of the packaged stuff sold by Wall Street.”

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